ScotlandIS Commentary

Facing the COVID-19 crisis from a position of strength

Every year, we conduct our Scottish Technology Industry Survey at the start of the calendar year. This means that most of the information you find in this report is based on responses collected before anyone could guess how much our everyday life and the operating and trading conditions for businesses would change. We tried to get a first indication of the impact Scotland’s digital technologies companies are expecting by doing a short follow-up survey at the beginning of April. The results showed unsurprisingly that the sector is less optimistic for 2020 than at the start of the year and more companies expect falling sales. Looking at the impact on employment, it is encouraging to see that nearly three quarters of respondents expect their staff numbers to stay the same or increase until the end of 2020. Companies selling products or services that are in particular demand during the crisis, like remote working solutions, connectivity or health tech, are seeing their business grow. However, nobody knows how long social distancing measures will have to remain in place, so these results provide only limited insight. Instead, let’s have a look at what we do know: The results of the Scottish Technology Industry Survey 2020 confirmed that our sector was in good shape before the COVID-19 crisis started. After a drop last year, optimism levels are up again to 79% of respondents having a positive outlook for the next 12 months. The review of 2019 shows that the sector’s performance has remained stable, with sales levels, cashflow situation and profit margins having only changed by two to four percentage points compared to 2018. Since the EU referendum, our survey showed that a considerable proportion of respondents is concerned about the impact of political uncertainty and decisions on their business. However, neither our survey results nor other statistics seem to suggest that the Brexit vote and its consequences have led to a significant downturn in growth. This could obviously change in the future, but our sector has so far proofed to be resilient. This resilience is one of the factors that make us optimistic that Scotland’s digital technologies industry is in a good position to weather the current crisis. Another reason for optimism is the fact that our sector is much better placed than others to continue to operate with all or a large proportion of staff working from their homes. A lot of jobs are entirely computer-based, the necessary equipment usually exists already and some of the workforce were working remotely for parts of their working weeks anyway. A third factor is the increased demand from all parts of economy and society for remote working which our industry has been busy trying to meet since the start of the crisis. Many companies have offered their products and services discounted or for free but hopefully some of this demand can be sustained in the longer term as more employers realise that remote working is an option, at least for a few days per month or week. Finally, a lot of ScotlandIS members and companies in the wider sector have rallied together to offer support for other businesses, public sector organisations and the Scottish Government or vulnerable people in our society which shows an amazing willingness to help each other in the face of adversity. This willingness to collaborate is also a key strength.

Evolving ScotlandIS services to help our industry grow

To make sure that our industry grows and prospers, even in the face of adversity, we continue to evolve and increase our support for ScotlandIS members which also benefits the wider sector. Over the last 12 months, we further developed our capabilities as the cluster management organisation for data and cyber security companies in Scotland. We recruited Katy Guthrie, who is heading up the work for the data cluster, and Ciara Mitchell, who is leading on our support for the cyber security cluster. Katy and Ciara have been working closely with companies, academic and other stakeholders in their respective ecosystems to develop initiatives that help them grow and improve Scotland’s data and cyber security capabilities. As one of the first major services, directories of Scotland-based companies offering cyber security and data related services have been launched to help raise their profile and map the clusters. We have also been working on improving our own capabilities and processes as a cluster management organisation. This allows us to utilise our resources as effectively as possible and to deliver maximum value for our members. We’ve asked the European Secretariat for Cluster Analysis (ESCA) to assess our progress. We achieved their Bronze label for cluster management excellence in 2015 and hope to have now fulfilled the criteria for the Silver label. This would put us in an excellent position to initiate further cooperation with relevant clusters across Europe and beyond and thus providing a window to international markets for our members as one of our strategic goals for 2020 and beyond. Taking some of our members to the UK-Netherlands Cyber & FinTech Summit in The Hague in February was one of the first steps to present the cyber security cluster and its capabilities abroad.

Keep on innovating to tackle the skills gap

The survey results have once again shown a relentless demand for digital technologies skills in our sector. We continue to innovative to address this skills shortage, most recently through two new initiatives. The Digital Skills Partnership, delivered by ScotlandIS, has launched a coaching programme, called Developer to Engineer, for early career software developers to accelerate their development and equip them with the skills to move into more experienced roles. This pilot started in January 2020 with 20 participants from 18 different companies and is a direct response to the lack of experienced developers reported by industry. To grow the talent pool available to our sector whilst also tackling unemployment, we have launched a National Progression Award (NPA) in the Fundamentals of Computing in partnership with the University of the Highlands and Islands. The fully funded 10-week course covers cyber security, networking and server technology giving participants not only their NPA but also a CISCO cyber security accreditation. The first cohort of students will be from previously hard to reach groups who may not have engaged with education in the past, or who are not currently employed to offer them a new pathway into the digital sector. We will work with our members and the wider industry to secure at least one job interview for everyone who successfully completes the course. We are in the process of developing a new ScotlandISskills strategy to make sure we keep delivering what is needed.